) reported first quarter 2012 adjusted earnings per share (
) of 29 cents, a stark contrast to the loss per share of 17 cents
in the year-ago quarter. The EPS in the reported quarter surpassed
the Zacks Consensus Estimate of 23 cents.
Including the impact of a write-down of an acquisition-related
note receivable, EPS was 18 cents in the reported quarter.
Including the net effect of restructuring costs, loss on early
extinguishment of debt and gain from sale of Bucyrus stock, Terex
reported a profit per share of 4 cents in the year-ago quarter.
Net sales at Terex increased 45% to $1.82 billion from $1.26
billion in the year-earlier quarter, ahead of the Zacks Consensus
Estimate of $1.78 billion. Excluding the impact of the Demag Cranes
AG acquisition, net sales increased 16%.
Costs and Margins
Cost of goods sold amounted to $1.5 billion versus $1.1 billion
in the year-earlier quarter. Gross profit increased substantially
to $330.8 million from $167.2 million in the year-ago quarter.
Gross margins expanded an impressive 500 basis points to 18% in the
Selling, general and administrative expenses increased 51% to
$267 million in the quarter. The company reported operating income
of $64 million compared with an operating loss of $9.3 million in
the year-ago quarter.
Total revenue at Aerial Work Platforms increased to $513.4
million from $378.2 million in the year-ago quarter. The segment
witnessed recovery in the North American rental channels for its
aerial work platform products and strong sales in Australia.
The segment's operating income increased substantially to $42.6
million from $5.7 million in the prior-year quarter as a result of
increased volumes and pricing, which were somewhat offset by higher
Net sales at the Construction segment were $363.1 million versus
$341.5 million in the year-ago quarter driven by strong truck and
component part sales particularly in the developing markets of
Russia, Africa and China. However, a lack of government
infrastructure spending in North America and Brazil had a negative
impact on the Roadbuilding business.
The segment broke even in the quarter. Benefits from cost-saving
initiatives and profits accrued in several Construction businesses
were offset by losses incurred in the Roadbuilding business. The
segment had suffered an operating loss of $3.2 million in the
Cranes reported total revenue of $419.4 million versus $398.3
million in the year-earlier quarter, with improvement in demand for
rough terrain cranes in North America, robust performance in
certain port equipment businesses and strong demand for pick and
carry crane products in Australia.
However, Crawler crane sales remained weak in Europe. The
segment reported an operating profit of $7.3 million versus an
operating loss of $22.5 million in the year-earlier quarter,
benefitting from restructuring activities that were taken during
2011, increased volumes and improved product mix.
Net sales at Material Handling & Port solutions were $367.5
million driven by demand for industrial cranes and mobile harbor
cranes. Region-wise, Germany and the United States showed strong
performance followed by India and China. The segment reported an
operating profit of $2.9 million as a result of strong machine
sales, particularly of higher-margin port equipment, as well as
spare parts, service and maintenance revenue.
Net sales at the Material Processing segment were $169.2
million, up 11% year over year due to strength in North American
markets followed by Australia and Asia-Pacific. However, lower
demand in Europe was a minor offset. The segment reported an
operating profit of $15.3 million, up from $12.3 million in the
As of March 31, 2012, cash and cash equivalents amounted to $973
million versus $774 million as of December 31, 2011. Cash from
operating activities was an outflow of $78.5 million during the
quarter compared with usage of $76.6 million in the prior-year
quarter. The debt-to-capitalization ratio deteriorated to 57% as of
March 31, 2012 from 55% as of December 31, 2011.
Management expects full-year net sales in the range of $7.5
billion to $8.0 billion. Full-year EPS is projected in the range of
$1.65 to $1.85. Operating profit is expected to be between $475
million and $525 million.
Terex had been continuously suffering losses since the first
quarter of fiscal 2009, affected by the global economic slowdown.
However, the company reversed its string of losses in 2011.
The Construction segment had so long been in the red but
delivered a break-even quarter this time. With an increase in
backlog and order quotation activity in the quarter, we expect the
segment to turn profitable.
With the recent Demag acquisition, Terex will add a new product
category of industrial cranes and hoists, and become the leading
worldwide player in port equipment. The combined entity will have a
strong footprint in Europe and the emerging markets, especially in
China, as Demag is counting on capturing the growing demand for
cranes in that country, the world's largest market for industrial
North America remains a strong market for Terex for most product
categories, with the exception of Roadbuilding products. However,
recent weakness in China and Europe remain concerns. We currently
have a Zacks #2 Rank (short-term Buy recommendation) on the
Westport, Connecticut-based Terex Corporation is a global
manufacturer of a broad range of equipment for the construction,
infrastructure, quarrying, mining, shipping, transportation,
refining, energy and utility industries.
The company's manufacturing facilities are located in the U.S.,
Canada, Europe, Australia, Asia and South America. It operates
through four business segments: Aerial Work Platforms,
Construction, Cranes and Materials Processing. Terex competes with
the likes of
Deere & Company
CATERPILLAR INC (
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